2019

RULES & INFORMATION

PACKET

The founders and administrators of the competition retain the right International Business Model Competitionto alter this packet at any time and for any reason without notice Rules & Information Packet • 1 TABLE OF CONTENTS

The founders and administrators of the competition retain the right International Business Model Competitionto alter this packet at any time and for any reason without notice Rules & Information Packet • 2 CASH PRIZE STRUCTURE

2019 COMPETITION TIMELINE

The founders and administrators of the competition retain the right International Business Model Competitionto alter this packet at any time and for any reason without notice Rules & Information Packet • 3 HOW DOES A BUSINESS MODEL DIFFER FROM A TRADI- TIONAL BUSINESS PLAN? The International Business Model Competition is about recog- nizing that any new venture is just a guess at a problem/ solu- tion and the only valid way to test whether those guesses are right is to “get outside the building” and start working with customers. So what exactly is the difference between a busi-WHAT IS THE INT’L BUSINESS ness model and a business plan?

MODEL COMPETITION? Outside versus Inside the Building: Most business plans are written using library research. Successful business models areOver 85 percent of new businesses fail within a few years, of- achieved through talking to customers and making changesten because they try to plan their way to success. It’s time to based on feedback from those conversations.change. Input versus Output Focus: Most business plan competitionsThe International Business Model Competition is the first and are focused on compelling write-ups and slide presentationslargest lean startup competition in the world. The compe- that check all the right boxes. In the IBMC, sleek presentationstition's primary aim is to educate and inspire smarter en- are not going to cut it. And the boxes that do need to betrepreneurs who in turn launch more successful ventures. checked are completely new and impossible to fake. The goal is to identify your hypotheses (assumptions) and turn them intoThe IBMC is a unique student startup competition focused facts by getting outside the building. And when a startup hason the inputs, not the outputs, of the entrepreneurial pro- done this, the story is compelling and it is an awesome one tocess. The competition requires active identification and vali- tell because it is based on facts. Validated learning about whatdation of crucial business model hypotheses rather than the customers really want is the stuff a business model is made ofwriting of a static business plan, talking to customers outside and music to the ears of potential investors.the building rather than gathering secondary data inside thebuilding, applying customer development rather than relying Lean Development versus Product Development: Moston product development, and “pivoting” or changing course business plans imply a careful development process to opti-rather than executing on the plan. mize the final outcome. Forget it. Apply Lean Startup princi- ples to radically compress your development cycle and take aSpecifically, the IBMC rewards student entrepreneurs for: prototype (even if it is just a picture drawn in the late hours of the night) to jump start the learning process. Find the most cre-1. Identifying and tracking key business model hypotheses ative but minimally viable product and start learning.(use a canvas)2. Testing and validating those hypotheses with customers (get Change versus Fortify: Most business plans attempt to for-outside the building) tify/prove the core idea with evidence. Judges of the IBMC3. Pivoting and iterating their business model based on cus- will be looking for instances where teams learned they weretomer interactions and feedback wrong and made a pivot in a new and right direction. Your ap- plication should focus on the lessons learned and “pivots”Submissions for the competition focus on the process entre- made—the more the better.preneurs undertake as they test their most crucial hypoth-eses with customers and develop validated business mod- Chasing Customers versus Chasing Funding: Let’s face it,els. The goal is validated learning about the key business many business plans are written to raise money. Unfortunately,model hypotheses and failing early is a success compared to the business plan formula doesn’t capture the answers VCsfailing late. most want to see: real validation you can make a product cus- tomers want. Instead of chasing the money, chase customers.Ultimately, we believe this new approach will improve the suc- Getting into the field you will validate the model and raisingcess rate of new ventures, allowing entrepreneurs to save both money will be easy (see appendix for more).time and money in the process. The IBMC is open to all stu-dents enrolled at an accredited institution of higher education Launching versus Talking: Business plans often talk aboutanywhere in the world. Each year thousands of student teams what will happen in the future. The IBMC is about what youfrom hundreds of schools all over the world participate. learned by applying a Customer Development / Lean Startup / Nail It Then Scale It process.

The founders and administrators of the competition retain the right International Business Model Competitionto alter this packet at any time and for any reason without notice Rules & Information Packet • 4HOW TO WIN THE IBMC Whichever particular method you use, the key steps are to 1) identify and track key business model hypotheses (use a can-Please note that while completing the items below will im- vas), 2) test and validate those hypotheses with customers (getprove your team’s performance, it does not guarantee that you outside the building), and 3) pivot and iterate the businesswill be invited to the international final or win the competition. model based on customer interactions. For the competition, you will tell us about the process and learning you wentChecklist for Winning the IBMC through, revealing the dead ends and surprises that you discovered along the way. □ #1 Complete Steve Blank’s “How to Build a Startup” course found Remember, the goal is identifying and validating the business on Udacity. model hypotheses that are crucial to the success of your busi- ness and failing early is a success compared to failing late. □ #2 Seek Out Your presentation needs to focus on telling the story of how an appropriate mentor(s) and meet frequently with you tested your hypotheses with customers, sharing the in- them to help you through the lean startup process. sights you made, and explaining the decisions you made based on those insights. We recommend practicing your pitch □ #3 Familiarize multiple times with your mentors to help you further develop yourself with the following IBMC website resources: your storytelling ability. You will manifest this by demonstrat- o Rules & Info Packet ing a deep understanding of your customers and revealing the o Judging Criteria details of how you may have discovered that some of your hy- o Validating a Business Model potheses were wrong and how you changed accordingly. o Preparing Your Submission and the concepts in the books below (most the books have summaries): o Nail It, Then Scale It o Business Model Generation o The Startup Owner’s Manual o Running Lean o The Lean Startup o Boom Start

□ #4 Track your progress by using a canvas. Consider using a digital tool to help with this process. A few are: o Business Model Toolbox for iPad (from cre- ators of the Business Model Canvas) o LEANSTACK.com (from the creator of the Lean Cavas) o LeanMonitor.com o Business Model Fiddle o TheStartupToolkit.com

□ #7 Complete the submission form on the IBMC website prior to the deadline

The founders and administrators of the competition retain the right International Business Model Competitionto alter this packet at any time and for any reason without notice Rules & Information Packet • 5 Nature of Venture Ventures cannot be a buyout, an expansion of an existingCOMPETITION DETAILS company, a real estate syndication, a tax shelter, a franchise, a licensing agreement for distribution in a different geograph-ELIGIBILITY GUIDELINES ical area, or a spin-out from an existing corporation. Licens-The IBMC organizers recognize that no set of criteria can ap- ing technologies from universities or research labs is encour-ply to every circumstance and therefore reserve the right to dis- aged, assuming they have not been commercialized previ-qualify any team that it determines to be in violation of the ously.spirit of the competition. Similarly, students who feel they fitthe spirit of the competition, but may be in minor violation of Language of the Competitionthe eligibility criteria, may submit a petition to Business- English must be used in all competition submissions andModelCompetition@gmail.com. All decisions will be made by presentations.the IBMC organizers and are final. Prior ParticipationTeam Composition While a venture may compete only once in the IBMC, teamCompeting teams should consist of no more than 5 degree- members may participate multiple times.seeking students enrolled at least part-time1 at an accreditedinstitution of higher education during the competition year. Dropping Out of the Competition – If a team with-Non-students may be part of the venture but cannot partici- draws, or does not compete in the competition after acceptingpate in the competition (e.g., video submission, pitching, a competition slot, the team and university will be subject toQ&A, etc.). disqualification from competing in the IBMC for that yearThe competition is for student-created and -managed ven- and the following year—a two-year ban.tures, including new ventures launched by licensing univer-sity technology. Students are expected to: 1. be the driving force behind the new venture, STRUCTURE OF THE COMPETITION 2. have played the primary role in developing the busi- Phase I – Compete: There are two ways to advance to the ness model, international competition. Your team can either: 1) earn an au- 3. have key management roles in the venture, and tomatic slot by winning an IBMC Qualifier Competition, or 2) 4. own significant equity in the venture (if allocated). compete in the At-Large Round and win one of the at-large slots. Teams that compete in and do not win an IBMC QualifierOwnership Competition can still compete in the At-Large Round.If the company has allocated equity, then the participatingteam members must collectively own 20% or more of it. Phase II – Mentoring: The quarterfinalist teams will have the opportunity to receive mentoring prior to the competitionControl and on Thursday, May 9th, 2019. Each team will have an op-The student team must control a minimum of 51% of the ven- portunity to pitch to and receive feedback from multiple men-ture’s voting rights. tors.Revenue Phase III – Quarterfinals: The quarterfinalists will presentBecause revenue is often the best form of validation, minimal their business models on Friday, May 10, 2019. These 10 mi-revenues gained in the process of validation are allowable for nute presentations should detail the business model process inthe competition. Excessive revenues will be evaluated on a a persuasive and professional manner. Judge Q&A for thiscase-by-case basis by the IBMC organizers. round will be up to 3 minutes.Investment Phase IV – Semifinals: The semifinalists will present theirNo more than $100,000 will be allowed from friends and business models on Friday, May 10, 2019. This round willfamily, debt (any source – convertible2, venture, traditional), follow the same guidelines as the quarterfinals. Judge Q&A foraccelerators, and equity investments (angel and venture capi- this round will be up to 5 minutes.tal). Phase V – Finals: The finalists will present their businessNOTE: We do not encourage early investment because it can models on Friday, May 10, 2019. All are welcome to attendlead to premature scaling which is a leading cause of startup this event. Each team will present for 10 minutes followed byfailure.

1 As defined by the by the participant’s accredited institution 2 Any convertible debt must be in the form of a standard debtof higher education. note with a separate agreement specifying the rules for con- version. Conversion cannot occur for at least 2 years from the date of the competition.

The founders and administrators of the competition retain the right International Business Model Competitionto alter this packet at any time and for any reason without notice Rules & Information Packet • 6up to 8 minutes of Q&A depending on how many teams are • Test Slides: How did you test these hypotheses? Whatselected as finalists. specific tests did you conduct? How many and what types of people did you interact with?Fit with Other Competitions – Students participating in • Result Slides: What did you discover? What factsthe IBMC may participate in other types of competitions, in- were uncovered? What facts remain to be uncovered?cluding business plan competitions. However, it is important One of the major purposes of the competition is to seeto clarify the fit with a business plan competition. Participa- if you have truly NAILED THE PAIN—but whattion in the International Business Model Competition should data do you have? How were your initial hypothesesoccur before writing a business plan. proved right or wrong? What pivots did you make? • Lessons Learned: Be sure to communicate the lessonsIt is the strong belief of the competition founders that most learned from your testing.businesses and business plans fail because entrepreneurs act • Appendices: Appendices should be included onlyon untested hypotheses. However, entrepreneurs who first when they support the body of the model. These ad-identify, test, and validate their most crucial business model ditional slides need to be available for giving contexthypotheses with customers are much more likely to develop and for answering questions judges might have. Be-businesses that succeed and are well positioned to dominate cause judges might not read all the material in the ap-business plan competitions because they have facts, not pendices, the body of the model must contain all in-guesses. formation pertinent to the model.

In general, remember that the goal of the International Busi-

SUBMISSION REQUIREMENTS ness Model Competition is to 1) identify and track key busi-Participants of the International Business Model Competition ness model hypotheses (use a canvas), 2) test and validatemust adhere to the following submission requirements: those hypotheses with customers (get outside the building), and 3) pivot and iterate the business model based on customerSubmission Entry – All teams (both automatic and at-large interactions. Your slides should clearly highlight your ini-teams) must complete the submission form on the IBMC web- tial hypotheses and how the process of investigating thesite’s Apply Page. In order to complete the submission form business model with customers has generated insights andyou will need: learning that have validated the hypotheses or led to • the link to your narrated multimedia presentation changes and subsequent testing. (PowerPoint, Keynote, Prezi, etc.) saved as a video and uploaded to YouTube and Confidentiality – Participants are responsible to protect any • to verify that your team agrees to the statements out- information they share as part of the competition. The organ- lined in the IBMC Certifications and Agreements izers of the International Business Model Competition take no form found in the Appendix of this packet responsibility for unwanted disclosure of patentable or protect- • a brief description of your company able ideas shared by a team or participant as part of the com- • a company logo petition. • a picture of all the members on your team • contact information for two team members Participants should not require, nor should they ask, any of the competition organizers, judges, mentors, and/or fellow partic-Your video should be 5-8 minutes long. If you need help cre- ipants to sign non-disclosure agreements (NDA). Participantsating your video submission, check out the Preparing Your are encouraged to seek legal counsel if they have any furtherSubmission page of the IBMC website. questions regarding the legal protection of their ideas.Your entry must be submitted online before 11:59pm MSTon Saturday, March 30, 2019. JUDGING CRITERIA & PANELS Each round of the International Business Model CompetitionSubmission Guidelines – Although there is not one format is judged using the following questions:for successful presentations, we recommend that submissionscontain the following components: Hypothesis • Title Slide: Who are you and what does the business • Did the team use a canvas to identify and track hy- do (pain and solution)? potheses? • Hypothesis Slides: What were your initial hypothe- • Did the team clearly state their hypotheses (assump- ses? Did you identify a customer problem? What tions)? were the key hypotheses about the business model? • Did the team identify the most crucial hypotheses to Remember some of your most important hypotheses test first (the ones that will kill their business)? are about customer pain and your solution to that Test pain. • Did the team design low cost, rapid, but reliable tests of these hypotheses? • Did the team conduct the tests in a reliable manner?

The founders and administrators of the competition retain the right International Business Model Competitionto alter this packet at any time and for any reason without notice Rules & Information Packet • 7 o Number of tests - should be adjusted for in- • At-Large Round – The at-large round will be dustry, product type (web vs physical prod- judged by a group of Brigham Young University per- uct), and business type (B2B vs B2C) sonnel and other lean startup experts from around the o Quality of tests - interviews are high quality, world. surveys & focus groups are much lower • Quarterfinal Event – The quarterfinals will be quality (you don’t know which questions to judged by lean startup experts from the local area ask) unless interviews have been conducted where the competition is being hosted and others first from around the world.• If appropriate, has the team developed a prototype or min- • Semifinal Event – The semifinals will be judged by imum viable product (MVP)? Does the team understand lean startup experts from the local area where the the hypotheses they are testing with a prototype or MVP? competition is being hosted and others from around Is the prototype or MVP appropriate to answer those hy- the world. potheses? (We want to reward the testing of hypotheses • Final Event – The final event will be judged by an using prototypes verses the building of products using un- all-star panel of lean startup experts. Past judges have tested hypotheses.) included Ash Maurya, Steve Blank, Alex Osterwal-Result der, Brant Cooper, Tom Eisenmann and Nathan Furr. • Did the team clearly state their insights and learning, how those validated or invalidated their hypotheses, and if that informed any pivots (changes)? CASH PRIZES & DISBURSEMENT • If changes were made, was the pivot the team made Through the support of university donors and corporate spon- supported by evidence or did they fail to pivot when sors, the IBMC is able to recognize top performers with cash the evidence clearly stated it? awards. It is expected that all winnings will be used for busi- • Does the team have significant evidence that the so- ness expenses that will help launch and/or grow your business. lution is validated (i.e., product-market fit, letters of intent, purchase contracts, sales, partners, etc.)? Cash prizes for the International Business Model CompetitionOther will be as follows: • Is the team solving a significant problem (defined in • 1st Place: $40,000* terms of money or impact)? • 2nd Place: $25,000* • 3rd Place: $15,000*NOTE: Because web-based businesses are easier to test, these • 4th Place: $10,000*companies can often pivot faster. Judges are asked to not pe- • 5th Place: $8,000*nalize physical product companies or health-related businesses • 6-10th Place: $5,000*because they have not performed as much testing and valida-tion as web-based businesses. • 11-20th place: $3,000* • Remaining Teams: $2,500*The composition of the judging panels for each round of thecompetition will be as follows: * Prize amounts are subject to change.

The founders and administrators of the competition retain the right International Business Model Competitionto alter this packet at any time and for any reason without notice Rules & Information Packet • 8 APPENDIX

International Business Model Competition 2019

CERTIFICATIONS AND AGREEMENTSBy submitting a Business Model ("the Model") to the International Business Model Competition ("the Competition"), each Par-ticipant agrees to the following conditions:

Originality of Model—Each Participant played a primary role in creating and developing the Model and the ideas and conceptsset forth in the Model are the original work of the Participants. No Participant is under any agreement or restrictions that prohibitor restrict his or her ability to disclose or submit such ideas or concepts to the Competition.

Compliance with the Eligibility Guidelines—Each Participant has reviewed the Eligibility Guidelines ("Guidelines") and certi-fies that they themselves, their team and entry comply with the Guidelines and agrees to abide by the Guidelines during the com-petition.

Waivers and Releases—Each Participant understands that the IBMC organizing committee, sponsors, judges, mentors, and co-organizers (collectively "Competition Officials"); and their directors, officers, partners, employees, consultants, and agents (col-lectively "Organizer Representatives") are volunteers and are under no obligation to render any advice or service to any Partici-pant. The views expressed by the Competition Officials and Organizer Representatives are their own and not necessarily those ofthe Competition.

Each Participant also understands that the legal protection of the ideas and the Model submitted to the Competition is the soleresponsibility of the Participant. Each Participant agrees to release the Competition Officials and Organizer Representatives fromresponsibility for unwanted disclosure of patentable or protectable ideas shared as part of the Competition.

The founders and administrators of the competition retain the right International Business Model Competitionto alter this packet at any time and for any reason without notice Rules & Information Packet • 9International Business Model Competition 2019 ADDITIONAL RESOURCES

Lean Canvas Development Guidelines:

The following is a breakdown and set of guidelines from Ash Maurya’s Lean Canvas Blog at Leanstack.com. These steps are designed as a seriesof action-based steps to help entrepreneurs focus on not falling into the trap of building something that nobody wants.There’s a clear delineation down the middle, on PRODUCT versus MARKET and here’s a brief description of each block and the order in whichto think/validate them:

1. Problem: A brief description of the top 3 problems you’re addressing

2. Customer Segments: Who are the customers/users of this system? Can they be further segmented? For example, amateur photographers vs.pro photographers. If you have multiple target customers in mind, for example, graphic designers vs. lawyers, you might consider creating a sep-arate canvas for each. More than likely a lot of the other pieces like problem, solution, channels, etc. will be different too.

3. Unique Value Proposition: What is the product’s primary reason you are different and worth buying?

4. Solution: What is the minimum feature set (MVP) that demonstrates the UVP up above?

5. Key Activity: Describe the key action users take that maps to revenue or retention? For example, if you are a blogging platform, posting ablog entry would be a key activity.

6. Channels: List the FREE and PAID channels you can use to reach your customer.

7. Cost Structure: List out all your fixed and variable costs.

The founders and administrators of the competition retain the right International Business Model Competitionto alter this packet at any time and for any reason without notice Rules & Information Packet • 108. Revenue Streams: Identify your revenue model — subscription, ads, freemium, etc. and outline your back-of-the-envelope assumptions forlife time value, gross margin, break-even point, etc.

9, Unfair Advantage: I left this for last because it’s usually the hardest one to fill correctly. Jason Cohen, a smart bear, did a great 2 part serieson competitive advantages. Most founders list things as competitive advantages that really aren’t. Anything that is worth copying will be copied.So what is a competitive advantage:

Unfair Advantage: Something that cannot be copied or bought.

- Jason Cohen, A smart bear

Business Model Canvas Development Guidelines:

The following is a set of guidelines for how to validate a business model adapted from Steve Blank’s Lean Launchpad course on customer andbusiness model development. The guidelines are designed as a series of action-based steps to get entrepreneurs outside the building and testingtheir assumptions with customers:

1. Analyze the idea: Write down the key hypotheses about each area of the nine areas of the business model based on Alex Osterwalder’s Business Model Generation (see below). a. Central questions: i. What is the core customer pain, or “job” that you are doing for the customer? ii. What is the business model? iii. What are the hypotheses about each of the 9 parts of the business model? iv. What is the Minimum Feature Set to test these assumptions? v. What are experiments needed to run to test business model hypotheses? vi. What is market size? In other words, how will you determine whether this is a business model worth pursuing?

2. Test the value proposition: Get out of the building and talk to 10-15 customers face-to-face. Use Survey Monkey or other tools to get more data but be sure to talk to customers. Use Steve Blank’s Customer Development model or Nathan Furr’s Nail It then Scale It model as a guide a. Central questions: i. What is the job customers are trying to get done? How significant is the pain? ii. What is your solution to the pain (product or service)? iii. Why will people want it? iv. What’s the minimum feature set to satisfy those customers? v. Who’s the competition or alternatives to your solution? vi. What’s the market type (new, established, re-segmented)?

The founders and administrators of the competition retain the right International Business Model Competitionto alter this packet at any time and for any reason without notice Rules & Information Packet • 11 3. Test the customers / users: Get out of the building and talk to 10-15 customers face-to-face to understand who is the customer? Who uses the product, who pays, and how are they different? a. Central questions: i. What were your hypotheses about who your users and customers were? ii. Did you learn anything different? iii. Did anything change about Value Proposition? iv. What are your customer acquisition costs? 4. Test demand creation: Test and understand how to build demand. If you are building a web site, actually do SEM, spend $20 as a team, test customer acquisition cost. Change messaging on site during the week to get costs lower, team that gets lowest delta costs wins. If non-web, build demand creation budget and forecast. Get real costs from suppliers. a. Central questions: i. How do you create end user demand? ii. How does it differ on the web versus other channels? 5. Test channels: Get out of the building and talk to 10-15 channel partners. If you’re building a web site, get the site up and running with the minimal feature set. a. Central questions: i. For web teams: 1. What were your hypotheses about your website? 2. Did anything change about value proposition or customers/users? 3. What is your customer lifetime value? ii. For non-web teams: 1. Interview 10-15 people in your channel (salesmen, OEM’s, etc.). 2. Did anything change about Value Proposition or Customers/Users? 3. What is your customer lifetime value? 6. Test the revenue model: Using the facts gathered so far, analyze the revenue streams, expenses, and key metrics for how your busi- ness makes money. Get outside the building to test the model. a. Central questions: i. What’s your revenue model? ii. How will you price your product? iii. What are the key financials metrics for your business model? iv. Test pricing in front of 100 customers on the web, 10-15 customers non web 7. Test partners: Get outside the building to talk to potential partners to understand the partnership channels, resources, and cost. a. Central questions: i. Who are your potential partners and the relationship (strategic alliances, coopetiton, joint ventures, buyer sup- plier, licensees) ii. What partners will you need? iii. Why will they partner with you? iv. What’s the cost of the partnership? v. Talk to partners 8. Test Key Resources and Expenses: Analyze what resources you need and when to build the business. a. Central questions: i. What resources do you need to build this business? ii. How many people? What kind? iii. Any hardware or software you need to buy? iv. Any IP you need to license? v. How much money do you need to raise? When? Why? vi. What’s your expense model? What are the key financials metrics for costs in your business model? 9. Lessons Learned: Identify the validated learning from customers, what you learned throughout the process, and how your business model has changed. What is the new, validated business model? Is it worth pursuing (remember even failure is a valuable lesson if you learn from it early and effectively).

Pivot: Don’t forget that with every assumption overturned, be ready to pivot to the new and valuable business.

Additional resources of interest include Steve Blank’s post on business models and funding:http://steveblank.com/2009/11/05/raising-money-with-customer-development/http://steveblank.com/2009/11/12/“lessons-learned”-–-a-new-type-of-vc-pitch/

The founders and administrators of the competition retain the right International Business Model Competitionto alter this packet at any time and for any reason without notice Rules & Information Packet • 12